Pune’s Power Dilemma

Last couple of days a critical and important piece of news that has been doing the rounds of the newspapers is the future of the Pune Power Model. MERC or the Maharashtra Electricity Regulatory Commission recently passed a judgment stating that the MSEDL or the Power Distributor needs to suspend the Pune Power Model. Ok so how does this make any difference? Well to understand this in greater detail lets first understand the Pune Power Model. The Pune Power Model is a scenario where some 80 odd major power consumers in Pune decided that they would generate their own Power and the difference between the cost of captive power generation and the grid based power cost will be borne by the Power consumers in Pune. In return for bearing this additional cost the consumer will not face any power cuts. This model has been working smoothly for the past 2 years.

However, it needs to be remembered that as a city Pune has been experiencing a growth that far surpasses Mumbai. This inevitably has lead to an additional requirement of Power for Pune City. MSEDL has been meeting this additional power requirement by drawing on the Power Grid. The MERC order is against this specific drawl of power from the Maharashtra Power Grid. The net result is that Pune will start facing a power cut of one and a half hour starting the 1st April 2008. The obvious question is "SO WHAT?". One of the reasons for Pune Growth as a Hub for IT/ITeS and Biotech has been the power situation in Pune and MERC's move is surely going to hurt the competitiveness of one of the Growth Magnets in Maharashtra and India. The losers in the bargain will be the citizens of Pune who have been subjected to this second class treatment for the last 40 years plus. The other BIG LOSER will be MSEDL for which Pune has been a high profitability location for a fairly long time. More over the order of MERC will also lead to a situation where the consumers of Pune will end up paying a higher tariff and still not get quality of supply. The move smacks of conspiracy by private power distribution companies that would like to dislodge a profitable state undertaking from its most profitable market.

Can one analyse the situation dispassionately to identify who is to blame for the current scenario? The answer is obviously yes, and the blame can be and should be shared between the Power Production companies/ Government, MSEDL and the MERC. The power shortage in Maharashtra is now new and additional capacities don't seem to be coming on steam for at least 2 to 3 year. The Government of Maharashtra has done little or nothing to correct this situation. Part of the blame also is ascribed to the MSEDL for not signing up additional capacities under the Pune Model. But the maximum blame lies with the MERC for its inability to plan and provide the necessary mechanisms to overcome the current crisis. MERC is also to blame for providing an impractical timeline to the MSEDL to make alternate arrangements. MERC need to take cognizance of the fact that Pune will outstrip Mumbai in both size and population in the next 3-4 years. Its tendency to continue treating Pune as a retired person's paradise shows a clear lack of vision, planning and capability to recognize reality.

The time has come for the people of Pune to dare the MERC to provide a similar treatment to Mumbai. Let Mumbai have a hour and a half long power cut every day with exception to the Western and Central Railways. This scenario is non-acceptable one to the Government and powers to be. It is critical for the Pune Power model to survive and succeed because this experiment has the capability to become a operational model for many cities like Pune. The failure to save this model will lead to a scenario that will benefit only the few powers to be.

The biggest of the beneficiaries will be the Independent Power Producers who will be able to arm twist the government for more favourable terms for their Greenfield power plants and a private power distribution company which has always eyed the Pune market and would like to oust the MSEDL from its most profitable distribution circle. Basis the sheer merits of the situation MSEDL needs to survive and the Pune Power Model has to succeed. There also needs to be a fundamental change in the scenarios that MERC plans for. The MERC has to take cognizance of Pune's growth and future pre-eminence over Mumbai both from a geographical size, population and size of its economy. Its inability to do so will hurt the investment potential of Maharashtra and lead to urban unrest in cities outside Mumbai. I have mentioned in my past blogs about the Indian Oligarchy. Its critical that the Oligarch don't succeed for the overall benefit of the society.

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